Microsoft Windows Installed Base to Cross 1 Billion Mark

Steve Ballmer said Microsoft Windows will run more PCs than there are cars in the world.

REDMOND, Wash.— Microsoft Windows will run more PCs than there are cars in the world by the end of Microsofts fiscal year 2008, said Microsoft CEO Steve Ballmer July 26 at the companys analyst day here.

The software giant announced it sold 60 million copies of Windows Vista this year, more than the entire installed base of Apple, and is well on the way to reaching 1 billion Windows users by the end of the fiscal year, Ballmer and Chief Operating Officer Kevin Turner told analysts and reporters. The latest number includes 40 million copies sold in the first 100 days of the products January release.

"The install base of Windows computers this coming 12 months will reach 1 billion," Ballmer told the group. "If you stop and just think about that, parse that for a second, by the end of our fiscal year 08, there will be more PCs running Windows in the world than there are automobiles, which is at least to me kind of a mind-numbing concept."

In an address at its annual financial analyst day at the campus here, Turner said that Vista was the most secure operating system Microsoft had ever shipped, adding that the numbers were there to back this up.

"There have been just 12 serious vulnerabilities reported with Vista over the first 180 days versus 25 for Windows XP over the same period. This number is also lower than for Apple and other operating systems. We have also seen 21 percent fewer support calls for Vista versus XP over the same period," he said.

/zimages/1/28571.gifA recent report found that security was driving Vista adoption. Click here to read more.

There were also some 2,000 applications certified for Vista, which was up from 650 at launch, and more than 21 million devices were supported and more than 11,000 available devices logod.

Fiscal year 2007 was also the best year ever for Windows, with $14.97 billion in revenue and 14 percent year-on-year growth. Vista contributed $1.9 billion to this, Turner said.

More than 42 million PCs today are covered by volume licensing agreements as customers, such as Continental Airlines, plan their deployments. Continental is planning to deploy more than 10,000 seats by the end of the year, he said.

Microsoft expects between 9 and 11 percent growth in the PC market, while revenue growth in emerging markets has grown by 19 percent, 27 percent and 33 percent over the past three years, respectively, representing 13 percent of total field revenue in fiscal 2007, he said.

/zimages/1/28571.gifClick here to read more about the top three Vista support issues.

Some 57 percent of Microsofts revenue was now generated outside of the United States, which has an average 18 percent non-U.S. growth rate, while more than 40 countries reported growth of more than 25 percent in fiscal 2007, Turner said.

During his address, Microsoft CEO Steve Ballmer said there were five things that the company had to do well: get the best people, continue to innovate, embrace disruption as a characteristic of long-term success, promote multiple competencies, and take a long-term approach.

Some 90 percent of the battle was attracting, retaining and enabling the best people, he said, noting that the company had hired a total of 12,800 people over the past year, 4,022 of whom were recruited to its product development teams.

While there had been an 8 percent attrition in staff over the year, 3 percent of this was "good" attrition, where people who were not performing were let go, while the "bad attrition—those the company wanted to retain—came in at 4 percent.

Some 25 percent of its research and development staff worked in locations other than Redmond, and the company continued to expand those facilities worldwide, Ballmer said.

/zimages/1/28571.gifTo read more about how Steve Ballmer is encouraging partners to embrace software plus services, click here.

On the innovation front, Ballmer said the quest was to build and buy and to focus on both the large scale and small scale.

The company also was embracing disruption, he said, referring to its software-plus-services plan and the new computational model that involved, which spanned the desktop, enterprise, online and devices.

"Every piece of software going forward will have a services component, but not everything will move to the cloud and be available through a browser," he said.

The desktop would offer a rich user experience, offline access and personal integration; the Web involved click-to-run, search and collaboration, anywhere access; the enterprise would have management and security; while there would also be new form factors and better mobility, Ballmer said.

"We are quite far along with the development of software plus services, which are broken down into buckets: personal services, developer services, business services and service enablers," he said.

/zimages/1/28571.gifClick here to read more about how Microsoft is still figuring out its core strategies.

"We are also going to be an advertising company and a devices company. We really do need to have consumer devices to help us continue to drive and develop and grow our business," he said.

Microsoft wanted to deliver end-to-end customer experiences and develop sales and support models that supported that. The company also needed to become an advertising powerhouse and would do this by exploiting the breadth and depth it already had, he said, citing the 380 million Live identities as well as its page views and query growth.

On the consumer electronics side, Microsoft would sometimes provide the hardware, software and services while, at other times, doing software and services and partnering on the hardware, he said.

With regard to the competitive front, Ballmer said Microsoft was very confident about its competitive capabilities against other software companies. Open source was another competitor and this was not a business model Microsoft could embrace, he said, noting that the company had taken some share back from Linux on the server for the first time last quarter.

"We have more opportunity over the next 10 years to deliver more growth and innovation and superior financial returns than ever before," Ballmer concluded.

During his talk, Jeff Raikes, the president of Microsofts business division, talked about the upcoming release of Windows Server 2008, Visual Studio 2008 and SQL Server 2008.

Microsoft had delivered 71 million Office licenses in the past year, while enterprise agreement renewals remained strong, he said.

The code for Office Communications Server 2007 and Office Communicator 2007 had been finalized and would be released to manufacturing July 27, which marks a significant milestone in the companys strategy for delivering software-based unified communications and VOIP capabilities, Raikes said.

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